Membership of private-sector occupational pension schemes continues to fall

The findings also underline the ongoing shift from defined-benefit (DB) to defined-contribution (DC) pension provision, according to Towers Watson. 

According to the latest Annual Survey of Hours and Earnings, 35% of private- sector employees were active members of workplace pension schemes in 2009, down from 37% in 2008.

In 1999, 45% of private-sector employees were in a workplace pension scheme.

Just 12% of private-sector employers were building up new DB pension entitlements in 2009, down from 14% in 2008. Ten years earlier, the proportion of private-sector employees in DB schemes was 30%. 80% of public sector employees were active members of DB schemes in 2009, according to the survey data.

Mark Duke, senior consultant at Towers Watson, said: "This has been a decade of decline for private-sector pension provision: more people either work for employers that do not offer pensions or fail to join the schemes available. The Government intends to force employers to put their staff into pension schemes automatically but has twice delayed these reforms because it loses tax revenue when people save for retirement.

"For the foreseeable future, the only way is down when it comes to the number of private-sector employees with defined-benefit pensions. Staff turnover is eroding the number of employees in DB schemes that no longer admit new members, and large deficits have persuaded more companies to force the pace of change by closing their schemes to existing members too. More people are going to have to get used to the idea that the ups and downs of financial markets will have a direct impact on their retirement income.

"The spotlight on public-sector pensions will only get brighter as DB pensions in the private sector become more and more rare."